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Gold Volatility Extends


Volatility looks to extend into the new trading week with a number of media reports overnight indicating that gold is a good hedge against higher rates and ballooning sovereign debt, bitcoin is “better”. However, the bitcoin trade has massive trading volatility and is still in its evolution stage, at-the-same time that China might crackdown significantly on crypto currencies.


While the palladium market lost its bullish dominance early last month, the corrective slide was justified given a softening of global economic psychology. However, the markets were presented with Chinese import and export data for May, but the data was offsetting. We suspect that palladium has balanced its technical condition and removed a large amount of weak handed longs with the May high to low washout of $260. The platinum market severely damaged its charts at the end of last week and despite-the-fact that the market from the May high has already seen a correction of $136, the net spec and fund long position remains burdensome to prices.


While the weaker than expected US nonfarm payroll reading provides a cushion to copper prices, the main event is likely to be Chinese import/export data for May. Unfortunately for the bull camp Chinese unwrought copper imports declined on a month over month basis and may reportedly the result of record high pricing. From the supply-side of the equation, production continues at a BHP facility in Chile (the world’s largest deposit of copper) despite the strike, with an initial proposal for labor offered at the end of last week.

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